GameStop shares were tossed aside for AMC, Bed Bath & Beyond, and other more volatile “meme stocks” over the last year. However, while those stocks were moving, it seems GameStop executives were busy making progress on the business. 🤔
Let’s take a look at how it fared during the fourth quarter.
Net sales dropped from $2.25 billion to $2.23 billion. However, the company reported its first net profit in two years. Earnings of $0.16 per share improved from its $0.49 per share loss a year earlier. 😮
The company’s turnaround plan has been in place for about six quarters and is finally showing results. It’s obvious to most analysts that its NFT marketplace, partnership with FTX, and other “digital” bets haven’t panned out as expected. That said, its full-year fiscal-2022 sales held up better than most expected. Net sales were down just over 1% YoY to $5.93 billion. 🛒
Executives have aggressively cut costs, closed underperforming stores, and improved the online shopping experience. That’s helped buoy sales and increase profitability by reducing selling, general, and administration (SG&A) expenses from 23.9% of sales to 20.4% of sales in 2022. 🔺
Investors were concerned about inventory levels, which ballooned to $915 million in 2021. However, the company made progress there, too, bringing that figure down to $682.9 million at the end of last quarter. Its also been working to bolster its cash position, which is roughly $1.39 billion. 💰
Overall, its turnaround plan appears to be going better than many expected. A return to profitability, improving margins, and essentially flat sales are all positive signs that its business is stabilizing. That said, executives continued their pandemic-era trend of not guiding for the coming quarter or fiscal year.
The market doesn’t seem to mind, though. $GME shares are up nearly 50% after hours. 📈
